At a recent fundraising dinner, affluent supporters of former President Donald Trump contributed an unprecedented $50.5 million. The event, hosted by billionaire investor John Paulson, hinted at significant potential benefits for these donors should Trump regain the presidency.
During the dinner, Trump indicated that a key focus of his potential second term would be the continuation of the extensive tax cuts that Republicans in Congress passed in 2017. While the Tax Cuts and Jobs Act did lower taxes for a majority of Americans, the wealthy saw the most substantial benefits.
Trump’s speech underscored a growing chasm between him, the likely GOP presidential nominee, and President Joe Biden. Biden is campaigning on a platform of increasing taxes on the affluent to finance his social and other initiatives, while safeguarding those earning less than $400,000 annually from tax increases.
Biden’s campaign swiftly criticized Trump for “pledging tax handouts to billionaire donors.” Sarafina Chitika, a spokesperson for the Biden campaign, stated, “Trump is signaling to his billionaire friends that he’ll seize the first opportunity to double down on tax handouts for the super-rich, even as he strives to dismantle Americans’ healthcare, slash Social Security and Medicare, and increase costs for working families.”
The future of the individual tax provisions in the 2017 law, set to expire at the end of next year, hinges on which party secures control of the White House and Congress in the upcoming November elections. If these provisions are extended, the Tax Policy Center, a nonpartisan research group, estimates that over 60% of the benefits would go to the top 20% of income earners, with more than 40% going to the top 5%.
If Trump’s plans come to fruition, those earning between $400,000 and $1 million could see an average tax cut of approximately $15,000, boosting their after-tax incomes by 3.1%. Individuals earning $1 million or more could see an average tax cut of about $50,000, increasing their after-tax incomes by 2.3%. Only about a quarter of the lowest income households would see a reduction in their taxes, with an average tax cut of $100, raising their after-tax incomes by a mere 0.5%.
The Tax Cuts and Jobs Act, which also introduced several corporate tax alterations, has already proven beneficial for the wealthy. “Almost everyone in every income group received a tax cut, but the highest-income individuals received the largest tax cut by a significant margin,” stated Howard Gleckman, a senior fellow at the center. The law lowered individual and corporate income tax rates, abolished personal exemptions, increased the standard deduction and child tax credit, limited or eliminated certain itemized deductions, and doubled the estate tax exemption, among other provisions.